When The Local Retailer Starts Packing Zalando Packages

The planned integration of local retailers, first started in a pilot phase with adidas in Berlin, is now slowly available for more retailers. The Zalando blog speaks of “#IntegratedCommerce: A Game Changer“:

In June, we started our first pilot project that brought us closer to this vision: We connected the very first brick-and-mortar stores, the adidas Performance and Originals stores in Berlin, to our online platform. We are digitalizing stock from these local stores and connect it to Zalando in order to create the best shopping experience for our consumers. (…)

Using our deep strategic and collaborative partnership with adidas for this pilot in the first weeks, Zalando now, takes a further step giving also smaller local stores the possibility to join the platform with only little effort and technological investment. With the support of the external local order management software gax-system, we pass on possible consumer orders, made at the Zalando online shop, to local partner stores that offer the ordered product as well. Within a two to four hour time-slot, the local store managers can decide whether they want to take over the order. If they, for example, don’t have the capacities as there are too many clients in the shop, Zalando takes over. (…)

Our #IntegratedCommerce approach provides new ways how fashion partners can join the Zalando platform through either connecting their stock from warehouses and local stores or by taking over order fulfillment. This is a huge opportunity with regards to the overall efficiency of inventory-sharing across partners in our ecosystem. With a bigger network and more learnings from our tests, we can prospectively extend the same-day delivery offers, increase the availability of products and sizes in our online shop as well as local stores. And even smaller local stores have the opportunity to participate in Zalando’s online business and add further sales without having to deal with an own online shop.

(…)for smaller, independent high street stores setting up and running a solid online channel can be both costly and difficult to maintain. Which is why Zalando launch its new pilot project in Germany, to enable local retailers the chance to connect with the Zalando Platform, using minimal technical effort through the external partner software “gax-system”.

​So, small stores for which dedicated online shops make little sense should choose this route with Zalando’s platform.

This low-tech backend integration makes sense for those stores, but only on first sight. At first, those stores get additional revenues. Maintenance for this new channel is minimal, comparatively.

But this kind of integration also means losing brand awareness and over the long haul becoming more interchangeable the more Zalando as a whole grows. (The whole setup is about adding interchangable parts to Zalando’s delivery network. Local stores become independent warehouses, adding redundancy. And lets be frank here: No store can cover their cost by just being a very tiny warehouse.)

It is still early, so partners are still scarce. Fashion United:

There are currently 10 local retailers working with Zalando, including Tip Tap Kinderschuhe in Weilheim, and Schuhhaus Fischer in Esslingen. These store can easily accept orders from Zalando customers and fulfill them when the matching item is available in their stores.

I don’t see this integration right now as very favorable to small stores. But then again, all the alternatives for small brick-and-mortar retail are probably even worse. This may delay the inevitable for some for a short while.

Also, for brands running their own stores, this is a no-brainer.

It makes a lot of sense that adidas was the pilot partner. They are a perfect fit for this.

Let me be Captain Obvious for one second: to make this work all partners need to win at the end. It is going to be interesting how this platform will evolve.